U.S. may have to refund half its tariff revenue as high-stakes court battle threatens to wreak havoc on the deficit and bond market

(Credit: Kevin Dietsch—Getty Images)

• Treasury Secretary Scott Bessent estimated Sunday that the federal government would have to return about half the revenue it’s collected from tariffs if the Supreme Court upholds a ruling that reciprocal duties are illegal. While he expressed confidence that the top court would side with the Trump administration, losing that revenue windfall could worsen the deficit outlook significantly.

A key source of revenue for the federal government could be drastically slashed if the Supreme Court upholds a ruling that President Donald Trump’s reciprocal tariffs are illegal.